While unemployment remains stubbornly high, inflation has suddenly begun to rise. An examination of the latest readings of two widely watched indexes, the producer price index and the consumer price index, reveal a rather disturbing trend that inflation is slowly but surely returning.

If you look at the price indexes on a year-over-year basis, most measures of inflation seem to be subdued. This is even more so when you examine the so-called “core” rate of inflation, which excludes food and energy.

But we all have to consume food and energy, and as far as most people are concerned, it’s what’s happening now that matters more than what took place this time last year.

That said, an examination of the latest readings of two widely watched indexes, the producer price index and the consumer price index, reveal a rather disturbing trend. Inflation is slowly but surely returning.

Wholesale prices in June surged for the second straight month, rising a whopping 0.8%, the fastest rate since last September. For their part, consumer prices jumped 0.5% in June, the most since February, and matching the monthly gains posted last August and September.

Looking back, this should be no surprise. The degree of monetary ease emanating from the Federal Reserve these past few years has been nothing short of astounding.

As the great economist and Nobel laureate Milton Friedman famously said: “Inflation is always and everywhere a monetary phenomenon.” Simply put, what we’re seeing are the consequences of too much money chasing too few goods.

This surfeit of liquidity had to go somewhere. First it went into the financial markets. Stocks and bonds soared to record highs.

Now it is showing up in the real economy. Gasoline and food, two items routinely excluded from discussions regarding the underlying rate of inflation, are spiking, thereby pushing the price indexes higher.

Gasoline in particular is bubbling up. Pump prices have soared more than 20 cents from their lows of early May, 15 cents of which came last week, with more hikes expected.

Of all the prices to exclude from the consumer and wholesale price indexes, this is the silliest. Gas and oil are vital to our economy, powering farms, factories, office buildings and, of course, providing the fuel to transport goods and people from one place to another.

Whenever the price of energy rises, fuel surcharges spring up until they become ubiquitous. This will occur in weak economies as well as in strong ones.

As a matter of fact, by transferring purchasing power from users to producers, a jump in energy prices will only serve to make our overall economy even weaker. It will hurt profits of non-oil firms as well.

Today’s economy is even more vulnerable to an oil shock, such as the one we are currently experiencing, because we are dealing with a hefty dose of fiscal drag. The Congressional Budget Office estimates that 1.5 percentage points of economic growth has been lost because of fiscal restraint.

Put these all together and we’re heading for the worst possible scenario for this economy, and the central bank’s biggest nightmare: stagflation.